Explaining incremental and non-incremental change: Medicaid nursing facility reimbursement policy, 1980-98

Political scientists have long distinguished between incremental and non-incremental policymaking. In this study, I illustrate the relevance of this distinction for comparative state policy research by modeling both incremental and non-incremental change in the same policy area: Medicaid nursing facility reimbursement. I use mixed-modeling techniques to model incremental year-to-year changes in per diem rates and payments per recipient and event history analysis and ordered logit to model non-incremental comprehensive innovation in this policy area. My results indicate that federal action prompted non-incremental change in capital reimbursement policy by limiting state discretion over incremental year-to-year spending decisions. Incremental policy appears to be affected by regional diffusion, but there is no evidence of this effect for non-incremental policy. Furthermore, when a state's fiscal health declined and the demand for government services grew, it was more likely to respond by making incremental adjustments than non-incremental system overhauls. Whereas governing capacity influenced both incremental and non-incremental change, state ideology influenced only incremental change. The rate at which states pursue incremental or non-incremental policy change depends on their relative vulnerability to federal policy changes, their receptivity to neighboring state influences, and their susceptibility to internal political, economic, and programmatic conditions.